ABSTRACT
This chapter presents a reformulation of the usual production-under-uncertainty and moral hazard models, as suggested by Chambers and Quiggin. It provides some empirical evidence on the coincidence of share leasing and the use of potentially environmentally damaging inputs, and we represent the relationship with a simple, stylized version of the economic problem. The chapter discusses model farmer behavior under share leasing in a state-contingent production framework, and use that model to investigate contractual relations. Relatively little attention has been given, however, to United States (US) share-leasing practices. The empirical literature on share leasing is largely devoted to examining whether share leases are Marshallian “efficient.” A logical way to start is to note that US agricultural production practices depart widely from the stylized models used in the share-leasing literature developed in the context of developing countries. The final determinant of the magnitude of the crop share is the responsiveness of expected yield to changes in the crop share.
